Publishers ‘missing out on huge tech R&D investments made around them’

Earlier this month Facebook reported record revenues for Q4 2016, smashing analyst expectations with $8.81bn, up 51 per cent on the same period of the previous year. Behind the headlines we also learnt that the company made its highest ever investment into research and development (R&D): $1.6bn, or 18.2 per cent of total revenue for the quarter, with a commitment to invest even further in 2017. The social media giant is not alone – both Google and Apple have reported increased R&D spend over the past year – highlighting an increased focus from the tech-side of the industry on future revenue streams.

Of course for a legacy media industry transitioning into digital, this is an unfair comparison. Technology companies are completely dependent upon the technological advancements they make to survive, while in the world of the published word, building on audience relationships around content arguably remains king. 

There is a feeling that an opportunity is being missed; that publishers could be doing more to embrace the huge levels of investment into media-tech going on around them. FIPP spoke to a selection of leading global media-tech providers to find out what the current media-tech research and development process looks like, and the sheer size and scope of the investment that goes into it. They are:

1. Nikolay Malyarov, EVP, chief content officer and general counsel, for PressReader. Quick take-out: “Our standard message has always been that publishers need to focus on their core competency: creating quality content. And let the experts in technology do the heavy lifting.”

2. Dieter Reichert, CEO, Censhare. Quick take-out: “Non-publishing industries [like brands doing content] are actually more likely to be the ones to appreciate and search for new technology systems like the ones Censhare can provide.”

3. Kris Nagel, CEO, Vindicia. Quick take-out: “Decisions in the product planning process are directly tied to whether the investment will help clients drive further revenue and growth in their markets.”

4. David Chalmers, marketing director for Europe, Cvent, from an earlier interview for FIPP and DIS 2017: “It’s up to technology providers to get the word out about the benefits that technology can bring and the return on investment it provides.” 

Below they tell us how greater media-tech collaboration can help publishers stave off threats not only from competitor brands, but increasingly also from external players outside of the traditional industry.   

“The industry has always been quite aloof towards the suppliers. They want them to pay their way to be noticed in the industry and yet that industry has not really engaged equally with them or been open to listening to them. It’s like the one-way conversations publishers created with readers by banning comments on their sites. 

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Above: Nikolay Malyarov, PressReader

“But in reality, the industry relies heavily on ‘supplier side’/tech companies. Publishers can’t do everything themselves because, frankly speaking, they don’t have the expertise or resources. And that’s why our standard message has always been that publishers need to focus on their core competency: creating quality content. And let the experts in technology do the heavy lifting. Too many publishers are looking in the rear view mirror, pining for the past, instead of looking for help to transition them profitably into the 21st century.”

Asked whether the company has a ‘Google-style’ approach to R&D, in which 20 per cent of time and resources are allocated to new projects, Malyarov explains just what an integral part of the process innovation is to a tech-focussed company like PressReader: 

“We have a Creative Lab and a tiered structure within R&D, much like Google – although we don’t necessarily have a 20 per cent rule applied to working on new projects: our percentage is higher than that. 

“At PressReader R&D has a slightly complex structure, which has to do with the types of the products we develop. We built a very robust and scalable platform in 2003 and continually add new features and functionality to it. Changes that we bring to the platform trickle down to all our other products, such as our branded editions. 

“We were pioneers in implementing an HTML5 intelligent content presentation engine that could automatically adapt, without any human intervention, to whatever content it received and display it on any device, with any size of screen, operating system or browser, in a format that would offer users the most engaging and interactive reading experience. 

“The tiered Lab-structure we operate isn’t based on seniority or years of service, but on proven skills and expertise. The way an employee moves up a tier is through peer-reviews of their work where the peers include those on the same level as the employee and one level up. This provides people with a very clear path for career growth within the company.”

Ultimately, for PressReader, success is based on the company’s ability to help move the digital publishing industry forward. “We’re a tech company, first and foremost, and being a tech company our primary investment is in R&D. Approximately 2/3 of our staff work in R&D and most of our profits are re-invested every year in development. Our core business model demands that we continually develop new technologies, products and solutions that help propel the publishing industry forward. 

“Unless as a publisher you’ve got a deep-pocketed technology entrepreneur at the helm, you can’t build an R&D centre out of a publishing house. You’re already struggling with continuously sliding advertising income and subscription revenues that are not catching up. Yes, they’re creeping up in some cases, but still for that level of technological development where are you going get the money? Consumers certainly aren’t going to pay for your technology and all of the continuous investment needed to build and evolve it.”

Censhare is a digital experience platform that offers both an enterprise content management system (ECMS) and helps build pages that enhance the user experience. A large emphasis is placed on the compatibility and applicability of different content formats online. Each content piece is broken down into individual ‘atoms’ (e.g. images, texts structures, rich media), completely media neutral via XML, so that it can be pushed into any channel and/or format. As the company’s CEO, Dieter Reichert explains, R&D is critical to Censhare’s success

“Being a technology company ongoing R&D is at the core of our business,” said Reichert. “Twenty percent of all development budgets (time, money and resources) are allocated purely for R&D for new technologies. Our development follows the SAFe framework and is organised with scrum teams. Testing is implemented into each scrum team with dedicated people. We have one separated scrum team solely responsible for new technologies and architecture. This way, innovation and research is an integral part of our agile development process and is not dependent upon the initiative of individual people.” 

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Above: Dieter Reichert, Censhare

Again however this is an investment, Reichert argues, that is not being fully taken advantage of by the media industry. In a world where brands have long since sought to become ‘publishers within their own right’, the sector itself could arguably be at risk of falling behind current trends.  

“The challenges with digitisation and digital transformation are obvious in the industry. However, a lot of publishers have been reluctant to switch to the latest technologies. This is understandable. Compared to our customers in the car manufacturing sector for example, publishing technology is at the core of what they do. It equals their assembly and factory processes. Changing it would heavily influence and change core business processes, traditional roles and responsibilities, etc. – not something you change or update easily.”

“However, not adapting here leads to situations you now have within a lot of publishing houses: Siloed teams and processes for print, web and other channels, separate content spread everywhere around a number of systems, and so on. Non-publishing industries are actually more likely to be the ones to appreciate and search for new technology systems like the ones Censhare can provide. 

“Our market share in publishing actually went down to 30 per cent in total and to only 10 per cent in 2016. This is changing, and during the last year we have seen more appreciation in technology especially in large publishing houses, so we do plan to communicate more with publishers in 2017. But still a lot of them are looking at point solutions to handle the ever increasing stream of new channels, devices and services, and not at the core of their (content) business and the relating processes.”

As a subscription and payments platform, Vindicia’s technology has particular relevance for publishers. The company emphasises how the industry benefits from shared investments and innovation within the tech ecosystem.

“Media companies tend to dominate the spotlight relative to tech companies,” said Kris Nagel, CEO of Vindicia. “With that said, media and the tech companies that support them have a symbiotic relationship. When tech companies fuel and advance media companies as a result of their R&D, tech companies mutually succeed. The market as a whole is changing rapidly and those that are leading the change are choosing platforms like Vindicia and they understand how tech and best practices can help them succeed.”

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Above: Kris Nagel, Vindicia

“R&D is an integral part of Vindicia’s business model. The company has processed $24.8 billion over 552 million transactions for 241 million digital accounts and 187 million payment accounts. R&D investments in key strategic areas such as data and business processes have made this growth possible. 

“Vindicia prioritises investment in R&D to maintain its competitive edge. In fact, more than half of the company’s HC is dedicated to R&D. Decisions in the product planning process are directly tied to whether the investment will help clients drive further revenue and growth in their markets.”

In a recent, other interview for FIPP looking ahead to the Digital Innovators Summit (DIS) in Germany next month, David Chalmers, marketing director for Europe at Cvent highlighted the lack of investment in new technologies in the events sector. Cvent is a platform that provides a comprehensive solution to manage the entire lifecycle of events.

“An astounding but very real fact in the world of technology and events is that almost 80 per cent of events are actually still managed manually. One of the biggest goals for Cvent in Europe is to open up the huge opportunity that technology can bring to the world of events and help event planners harness the benefits that this gives them for planning and promoting their events and engaging their audiences.”

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Above: David Chalmers, Cvent

He reiterates that changing mindsets and educating the industry about the huge investments and evolutions going on in the media-tech world, is a key challenge in the events sector: “It’s up to technology providers to get the word out about the benefits that technology can bring and the return on investment it provides, as well as how it can transform the attendee experience. Of course, if event organisers have been used to handling things manually for many years, then a change in mindset doesn’t happen overnight.”  

For an industry looking to develop its technology further and pack a greater collective punch against the increasingly powerful forces of Facebook and Google, there are a great number of media-tech developments to take into mind. 

Huge investment is being made – in terms of time, money, focus – on new ways to share and monetise content, develop audience relationships and more. 

From the technology side of the industry the message is simple: be a part of this innovation. With so much investment, development, and competition taking place in media-tech globally on a daily basis, the technology surrounding content is evolving. The key now is to move towards greater collaboration within the industry to ensure that those opportunities are not missed.

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